Oil ministers from the Gulf states defended OPEC's recent
decision not to cut output despite a near-halving in oil prices
since the summer, saying it was impossible for the oil-producer
group to alone push up prices.
Rising oil production from nonmembers of the Organization of the
Petroleum Exporting Countries has made it difficult for the cartel
to cut its own supplies and control prices, Saudi Arabia's Oil
Minister Ali al-Naimi said, in his first detailed remarks since
OPEC met in Vienna on Nov. 27.
"The share of OPEC, as well as Saudi Arabia, in the global
market has not changed for several years...while the production of
other non-OPEC [countries] is rising constantly," Mr. al-Naimi said
in remarks published Thursday in Arabic on the official Saudi Press
Agency, or SPA.
"In a situation like this, it is difficult, if not impossible,
for the kingdom or OPEC, to take any action that may result in
lower market share and higher quotas from others, at a time when it
is difficult to control prices," Mr. al-Naimi was reported as
saying.
Mr. al-Naimi has been under pressure within Saudi Arabia to
explain the Kingdom's stance at the meeting, with some arguing that
OPEC's largest oil producer should be doing more to help reduce
excess global oil supply. Some poorer OPEC members, such as
Venezuela, have also continued to press for the cartel to respond
more vigorously to oil's slump. Brent crude was trading at around
$62.8 a barrel on Thursday, a 4.8% rise on the day but some 45%
below its peak in mid-June.
Mr. al-Naimi's comments were echoed by the energy minister of
the United Arab Emirates, Mohamed Faraj Al-Mazrouei.
"No one likes the price drop, but it is not right that one party
should interfere to fix the matter. (The party) responsible for the
price fall should contribute to fix the imbalance in the market,"
Mr. al-Mazrouei told official news agency WAM.
Saudi Arabia has been at the forefront of those within OPEC who
argue that it would be pointless for the cartel to cut its oil
supply in response to slower global demand growth and increasing
supply from places like the U.S., as this would only allow other
producers to seize market share and benefit from any uptick in
prices.
Mr. al-Naimi said that OPEC members had tried to cooperate with
non-OPEC producers in recent months to formulate a collective
response to the slowdown in global oil demand growth, but those
efforts had failed.
Mr. al-Naimi and his counterpart from the U.A.E. expressed
confidence their countries could withstand lower oil prices. Mr.
al-Naimi said Saudi Arabia has a strong economy and huge financial
reserves that mean it can bear the temporary volatility.
"I'm optimistic about the future. What we are facing, and the
world is facing is a temporary situation. The world economy,
especially the economies of the emerging countries, will return to
grow steadily and subsequently demand for oil will grow too," Mr.
Naimi said.
He denied that Saudi Arabia's political objectives underpinned
its approach to falling oil prices.
Some analysts have suggested the Kingdom is happy to see lower
oil prices as it does more to harm the economies of its diplomatic
enemies such as Iran and Russia. Mr. al-Naimi instead blamed
"speculators" for much of the sharp swings in global oil
prices.
Write to Summer Said at summer.said@wsj.com
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